United States v. Baratov

United States v. Baratov Collection Decisions of the Court of Appeal Date 2017-06-09 Neutral citation 2017 ONCA 481 Docket numbers M47883 Judges Miller, Bradley Subject Criminal Decision Content COURT OF APPEAL FOR ONTARIO CITATION: United States v. Baratov, 2017 ONCA 481 DATE: 20170609 DOCKET: M47883 Miller J.A. (In Chambers) BETWEEN The Attorney General of Canada On Behalf of The United States of America Respondent and Karim Baratov Applicant Ravin Pillay and Amedeo Dicarlo, for the applicant Heather J. Graham, for the respondent Heard: June 5, 2017 Application for review of detention order pursuant to the Extradition Act, S.C. 1999, c. 18 by Justice A.C.R. Whitten of the Superior Court of Justice, dated April 11, 2017, with reasons reported at 2017 ONSC 2212. ENDORSEMENT [1] Karim Baratov was denied judicial interim release in the Superior Court pending his hearing for extradition to the United States. He now applies to this court for a review of that order. He initially appealed on the basis of errors said to have been made by the application judge. He now argues, in addition, that a change in circumstances since the initial bail hearing authorizes this court to vary the order. Background [2] The United States seeks to prosecute Mr. Baratov for conduct that corresponds to the Canadian offence of unauthorized use of a computer, contrary to s. 342.1 of the Criminal Code, R.S.C. 1985, c. C-46. He is alleged to have operated as a hacker-for-hire to gain unauthorized access to email accounts. On March 14, 2017, he was arrested on a warrant issued under the Extradition Act, S.C. 1999, c. 18, s. 13. [3] At his bail hearing on April 5, 2017, Mr. Baratov proposed that he be released into the custody of his parents and reside with them, subject to complete house arrest with stringent conditions: he would be subject to 24 hour supervision by his father, there would be no internet access in the home, and he would be subject to electronic monitoring at all times. Additionally, his parents would post their entire equity in the family home, close to $1 million, as security. The decision below [4] The application judge denied the application, finding that detention was justified on all three grounds set out in s. 515(10) of the Criminal Code: (1) flight risk, (2) the need to protect the public, and (3) the need to maintain public confidence in the administration of justice. He canvassed the case law interpreting that section, and noted that the third ground is assessed by reference to: i) the apparent strength of the prosecutor’s case; ii) the gravity of the offence; iii) the circumstances of the offence; and iv) whether the individual, if convicted, would face a long period of incarceration. [5] The application judge accepted that the offence alleged is a "serious offence" committed for the benefit of, at the direction of, or in association with, a criminal organization. He therefore found the reverse onus provision in s. 515(6)(a)(ii) of the Criminal Code to apply, which places the onus on the accused to satisfy the court that detention is not justified. The application judge found that Mr. Baratov failed to discharge this onus. [6] The application judge was particularly concerned with the severity of the offence and Mr. Baratov’s flight risk, given his ability to generate what appeared to be substantial income from any location where he can get internet access, without regard to borders. He noted that in the extradition context, Canada’s obligations under international treaties provide a reason for the court to be even more probing of flight risk than in the domestic context. [7] He noted that with respect to the apparent strength of the prosecutor’s case, the test is whether there is some evidence on which a properly instructed jury could convict: United States of America v. Thomlison, 2007 ONCA 42. The limited role of the court in assessing the strength of the case in an extradition proceeding (and by extension a bail application pending an extradition proceeding) was well articulated by Thorburn J. in Mandall v. United States of America, 2010 ONSC 1202, para. 50: The role of this Court in an extradition is a limited one and does not involve weighing the merits of the evidence against the person sought and determining whether his conviction in the foreign jurisdiction is likely. In determining the strength of the case against Mr. Mandall in this jurisdiction, the question is not whether he is likely to be convicted in the United States, but rather, whether this Court is likely to order his extradition. The application for review Standard of review [8] Mr. Baratov seeks review of the order denying interim release. He brings this motion on two different bases. First, he argues that the application judge erred and misapprehended the evidence before him. The standard of review in this context requires a demonstration that the application judge made an error in principle: United States of America v. Pannell (2005), 193 C.C.C. (3d) 414 (Ont. C.A.), at para. 24; United States of America v. Ugoh, 2011 ONSC 1810, 269 C.C.C. (3d) 380, at para. 9. The scope of review on an error in principle was explained by Laskin J.A. in R. v. Riezaie (1996), 31 O.R. (3d) 713 (C.A.), at para. 20: Error in principle is a familiar basis for reviewing the exercise of judicial discretion. It connotes, at least, failing to take into account a relevant factor, taking into account an irrelevant factor, failing to give sufficient weight to relevant factors, overemphasizing relevant factors and, more generally, it includes an error of law. [9] On this standard of review, the issue is, as Sharpe J.A. stated in United States of America v. Chan”: (2000), 144 C.C.C. (3d) 93 (Ont. C.A.), at para. 2, “not whether I would grant bail if the matter came before me at first instance, but rather, whether the applicant can demonstrate reviewable error on the part of [the application judge].” [10] The second basis for the motion is that there has been a material change in circumstances since the order, which necessitates a variation of that order: s. 520(7)(c) of the Criminal Code. If the reviewing court is satisfied that there has been a material change in circumstances, such that the application judge would not have made the order that he did had he been aware of these circumstances, it has the authority to vary the order: R. v. St-Cloud, 2015 SCC 217. The first basis: error in principle [11] Mr. Baratov points to four alleged misapprehensions of evidence that require this court’s intervention. These misapprehensions, it is submitted, prevented the application judge from conducting a proper application of the three-part test for interim release. As I explain below, although I am satisfied that the application judge misapprehended the evidence in some respects, these errors did not result in an improper application of the test. That is, the errors were not material and could not have affected the result. [12] The first misapprehension is said to be that the application judge found that Mr. Baratov had breached the secure computers of Yahoo, Google, and other companies, and gained unauthorized access to these computers. The Crown concedes that this was an error. Not only is there no evidence to support such a finding, but no such allegation against Mr. Baratov was ever made. [13] The second misapprehension is said to be findings that Mr. Baratov worked with Alexsey Belan, who was the party alleged to be responsible for the massive hack into the Yahoo servers, and who fled from Greece, where he was subject to extradition proceedings to the United States, to Russia. I find this submission to be mistaken. The application judge nowhere states that Mr. Baratov worked with Mr. Belan. His one reference to Mr. Belan as Mr. Baratov’s “colleague” does not suggest that Mr. Belan and Mr. Baratov acted directly with each other, or even had any knowledge of each other. “Colleague” is used in an analogous sense, to indicate that both acted under the direction of the same persons, who were officers of the FSB, to serve the same ultimate purpose. A related point is that there is no evidence that Mr. Baratov knew the identity of the individual who instructed him to conduct the hacking, or that this person was a member of the FSB. Again, the application judge was under no such misapprehension. [14] The third misapprehension is said to be the finding that Mr. Baratov is “highly skilled at ‘hacking’.” Again, to the extent that this conclusion is drawn from the finding that Mr. Baratov “breached the firewalls of Yahoo”, it rests on a misapprehension. However, it does not follow that because Mr. Baratov is not alleged to have breached the firewalls of Yahoo, that he is not highly skilled at hacking. Mr. Baratov’s counsel seeks to draw a distinction between “spear phishing”, which is the conduct Mr. Baratov is alleged to have engaged in, and breaching secure servers. I accept that the latter requires a great deal more technical ability than the former. Spear phishing preys on the unwary individual user of a computer, and defrauds them of confidential information by duping them into thinking that they are dealing with a legitimate entity. Nevertheless, spear phishing, as Mr. Baratov is alleged to have practiced it, involves creating spoof websites that mimic the legitimate websites of third parties. Mr. Baratov is alleged to have been successful at duping highly sophisticated persons in business and government into revealing passwords. The application judge justly characterized this activity as highly skilled. [15] The fourth misapprehension is said to be the finding that Mr. Baratov made a substantial income from the alleged hacking, totaling hundreds of thousands of dollars, when there was no evidence of this and the Record of the Case alleges evidence of only a single payment to Mr. Baratov of $104.20. [16] Again, there is no misapprehension. The application judge made findings that Mr. Baratov secured substantial funds illegally. He drew an inference that the funds were obtained as a result of Mr. Baratov’s services as a computer hacker, services that he advertised to third parties. It is irrelevant to the analysis undertaken by the application judge whether Mr. Baratov received these funds from the conduct covered by the Indictment, or otherwise. The fact is, Mr. Baratov gave evidence and was not able to persuade the application judge that he had any sources of legitimate income that could account for him acquiring, by age 22, a house, a string of luxury automobiles, and $31,000 in cash. The explanations that Mr. Baratov offered were found to be not worthy of belief. [17] What is relevant, for the purposes of the application judge’s analysis, is that there is evidence that Mr. Baratov is capable of generating significant earnings, not tied to any geographic location, and that this fuels his flight risk. These findings were open to the application judge on the record before him. [18] Finally, no error in principle was identified in the application judge’s rejection of the proposed release plan. The second basis: material change in circumstances [19] Mr. Baratov sought (and was granted) leave to admit fresh evidence, consisting of the Record of the Case for Prosecution, dated May 8, 2017, the Authority to Proceed, dated June 2, 2017, and the First Supplemental Record of the Case for Prosecution, dated June 2, 2017, both from the US Department of Justice. The US Department of Justice certified that the evidence contained therein is available for trial and is sufficient under the laws of the United States to justify prosecution. This fresh evidence, Mr. Baratov argues, changes matters so significantly that it opens up a second avenue to reviewing the order of the application judge: a variation on the basis of a material change in circumstances. [20] Mr. Baratov argues that the case against him has changed significantly with the new material. He is no longer accused of participating in a conspiracy, but only unauthorized use of a computer. This narrows the allegations considerably, Mr. Baratov argues, and entails that the reverse onus provision no longer applies. [21] I do not accept this submission. The argument that there has been a material change is weak. The receipt of the new reports was contemplated by the application judge. It is perhaps more clear than the original notice that Mr. Baratov is not alleged to have known the others working in the scheme, but it nevertheless remains the case that Mr. Baratov is alleged to have performed work, at the direction of others, for payment, for what he knew to have been a criminal purpose. The element of conspiracy in a criminal enterprise thus remains, as does the application of the reverse onus provision. Even if I am wrong in that, however, and the reverse onus provision does not apply, on the findings of the application judge and considering the fresh evidence, the Crown would have discharged its onus of establishing that the release of Mr. Baratov would not be warranted under the three-part test. Conclusion [22] There were no reviewable errors, and no material change. At the end of the day, Mr. Baratov remains a significant flight risk, and is alleged to have committed a serious offence. [23] Counsel for Mr. Baratov argues that what is alleged against his client is a comparatively minor and victimless crime. [24] It is anything but. Whether the applicant was paid nothing or was paid millions; whether the skill and energy expended were advanced or basic; whether he thought he was dealing with the FSB or with a high school principal, the alleged conduct remains a destabilizing attack on the integrity of systems that are vital to all of our wellbeing. Even unsuccessful attacks imperil public confidence and require the commitment of substantial resources for defence. The public cost, monetary and psychological, is broad and deep. The application judge well understood what is at stake: Individuals are financially ruined by the pirating of their identifying details (which includes passwords) and the plundering of their accounts. Commercial mayhem flows from the pirating of trade secrets, technical information and confidential communication. National security is compromised by the acquisition of sensitive information. The hacker is a menace to a system that struggles to preserve its integrity. There are no known social benefits to the activity. We cannot afford to be romantic about this crime. [25] The Crown advises they are ready to proceed with the extradition hearing. I understand that Mr. Baratov may wish to bring applications challenging jurisdiction and the constitutionality of the acquisition of evidence. These applications can, of course, be heard together at the extradition hearing. The length of time Mr. Baratov spends in detention awaiting the extradition hearing is more or less within his control. [26] I renew my thanks to Mr. Pillay and Ms. Graham for their learned and skillful submissions. Disposition [27] The application is dismissed. “B.W. Miller J.A.”